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London Stock Exchange vs. Wall Street: Battle for Listings | Why UK Firms Prefer US IPOs!
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Oct 7, 2024
Join us for "Your Questions Answered" as we dive deep into the challenges facing the London Stock Exchange and the IPO market. Our Investment Editor, Charlie Conchie, dissects the epic showdown between London and New York. š„ š·šŗ Russia's impact on market volatility & IPO closures. šŗ London's mission to revamp its markets. š Firms choosing New York over London: Why? š° The equity market debate: Private vs. public. š¬š§ UK firms seeking US capital: Implications. š” The need for change in the business sector. š¤ Crafting a better London narrative. š The coolness factor in economics. Stay informed about the latest economic and business news at https://www.cityam.com/ and on our app š¤³ https://www.cityam.com/app-download/ Don't forget to like, share, and subscribe for more insightful discussions! š°š±š #londonstockexchange #ipostockreview #financetips #financenews #globalmarkets #finance
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0:00
Hello and welcome to City AM's video series
0:06
Your questions answer where we try and get to the heart really of the matters that are getting the square mile talking
0:13
And an awful lot of city chatter over recent months, indeed slightly longer than that, has been the London stock market, the London Stock Exchange and the capital's performance, I suppose, when you compare it to international peers, particularly like New York
0:27
No, I'm better to discuss it than Charlie Conchurch. our investment editor, very quickly, take us through the sort of last 12 to 18 months of what's
0:36
happened to the stock exchange and why people are starting to, I suppose, threat for its future. So yeah, you're right. It has been, you know, a tricky, it's probably an understatement
0:44
a few months and a year or so for the London stock exchange, but, you know, more broadly as well
0:49
the IPO market has been pretty torrid. And I think it's probably important to contextualize
0:54
some of those London troubles in the wider global picture. So, you know, ever since really Russia
0:59
invaded Ukraine, global markets have been, you know, fairly all over the place. And the IPO market
1:04
has largely been shuttered, I think particularly, you know, sort of second two quarters of last
1:09
year was a complete drop off. I think there are some, you know, important and very unique
1:15
London factors in there as well. I think you see the amount of reform efforts that have gone on
1:19
since 2020, really, we saw the Hill Review then. There was kind of this, the bull began to roll
1:24
and trying to jure up for for lack of a better word London markets trying to sort of rip away some of the red tape the historic red tape But I think you know as you said the picture has been fairly gloomy particularly this year
1:36
A lot of the conversation has been about firms going to New York, homegrown firms, canning their London listings, scoping out dual listings
1:44
And I think in the square mile, there is a bit of a sort of mood of gloom and of panic, to be honest with you
1:52
which is all sort of building up into a place that firms don't really want to be listing in at the moment
1:58
Yeah, that makes sense. Of course, the thing that grabbed everybody's attention was the arm listing
2:02
So this is the chips firm based in Cambridge, owned by SoftBank
2:06
But, you know, looking at a listing and they obviously chose New York and so London, despite political pressure
2:12
we've seen Flutter put together a secondary listing in New York. And there have been other, you know, UK firms over the past few years that have listed in New York
2:20
Think about Kazoo and Babylon. Now, their floats haven't gone particularly well there
2:24
so maybe that's not a very good advert for going across the pond. But I suppose the question is, for all the Sturm and Drang
2:31
the heat and light of all of this, how important is it to have functioning equity markets
2:35
Because there are some that argue that, well, as long as the private markets, capital markets are still functioning
2:39
then maybe we're just being a bit sort of arrogant, maybe being a bit romantic to think about this sort of stock market
2:46
when there's so many other ways to raise capital. I think the language which sort of government and
2:52
which is London Stock Exchange talk about you know the situation we in at the moment It actually a lot you can glean from that with you know talk of building globally consequential companies wealth creation job creation And it is about keeping firms you know homegrown firms listed in London
3:09
allowing them to access the capital they actually need to grow here. Whereas, you know, traditionally firms get to a certain size
3:15
They realise they need a certain amount of capital to finance the growth plans that they're really looking at, and they do very often head off towards the US, which inevitably means, you know, a pivot in maybe
3:25
strategy and direction talking to US investors and it perhaps does mean that there is you know
3:30
the money that would be flowing into the UK the jobs that might be being created in the UK aren't
3:34
and I think that is the crux of the issue and why there is you know so much political attention on it
3:38
and so much you know perhaps news attention on it at the moment as well yeah well there's certainly
3:43
political attention you referenced the Hill review earlier which is around a listing rules
3:47
there's been the Austin review which was around a different part of capital markets there's now
3:51
review that's just finished. We're waiting for the results of it around, although I suppose the consequences of it around research and ysis. There's all sorts of
4:00
of work going into identifying the problems. I suppose the hope really from those who want
4:09
are functioning vibrant capital markets or equity markets is that that that starts to filter
4:14
through pretty quickly, right? Because otherwise there's a risk that it feels like an awful lot of attention and not enough of it actually turning into real meaningful change for the
4:21
businesses on the ground that might be thinking about this thing. Yeah I think you right there probably a sense of review fatigue and I think there was actually a bit of an effort to try and tie up those various reviews in a bit more of a coherent package We had Austin and Hill and the investment review was launched
4:38
And then there was sort of in May time, this attempt to kind of tie them together into a better
4:44
narrative for London. I think it was talk of creating a new sort of market structure, which plays to perhaps
4:50
the kind of deeper issue, which is for all the regulatory tweaks, for all the
4:55
the changing rules and FCA coming in and sort of merging its premium standards segments
5:01
there is this vibe issue in London at the moment. And that I think is going to be the harder thing to reset
5:08
And that is perhaps why we haven't seen the immediate impacts alongside the global context
5:13
we talked about. There is this feeling of would we really want to list in London at the moment
5:18
It's a vote of confidence in, a lack of confidence in the UK's economic outlook
5:22
So there is perhaps a deeper underlying issue that goes. beyond just regulatory and rule tweaks
5:28
It's amazing if you use that word vibe. It is amazing how if you get to the heart of economics and confidence
5:32
so much of it comes down to what people think is cool at the moment. And there's not much government, as we know, can do about what people think is cool
5:39
So Star Exchange has got an interesting period going forward, and it will certainly be one to watch through the second half of this year
5:44
and many years beyond, I'm sure. I've been Annie Silvesta. This is CitM
5:48
Don't forget to check out all the economics and business news on Citiam.com. In the paper, online and now in the app as well
5:55
Thanks, Charlie
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